Online Stock Trading

With the explosion of the internet stock market trading has been revolutionised with nearly all brokers now offering online stock dealing platforms and services. Gone are the old fashioned days in which you had to call your broker to get you a quote (although many still deal in that way) and stocks can be bought and sold with the click of a button on your home p.c. Many traders and investors have warmed to online trading as you can remain totally anonymous behind your trading screen.

With this revolution came the explosion of Day Trading stocks and Indices. Day Trading is to buy and sell a stock or security within the same day, usually via CFD so you can use margin to leverage a larger position than you could normally afford allowing you to profit from small movements in price. It has to be said that with this leverage also comes a big risk of losing money when the price moves against you.

With CFD’s you can buy stocks "long" or sell stocks "short" and make a profit both ways. Buying long and selling higher is an obvious way to profit, but with selling short you are looking to sell a stock and buy it back at a lower price, profiting from the difference between the two trades.

Day traders usually trade stocks which are very liquid i.e stocks that have plenty willing buyers and sellers allowing you to move in and out of positions easier. Popular day trading stocks are usually volatile with big intraday swings allowing traders to profit from moves of just a few cents. Stocks which allow day traders to measure market depth are also popular. Market depth can be gauged by such a system as the Nasdaq level 11 quote system with which you can view which Market Makers are offering the best buy and sell prices and also the amount of stock ready to be bought or sold at a certain price. Knowing this information is a must for day traders as they can see they amount of willing buyers if they are to trade in that direction and vice versa.

Swing trading or position trading is a longer term method than day trading in which a trader would be looking to take a position in a stock from maybe a few hours to several days or weeks. A popular way of swing trading is to follow support and resistance levels and buy and sell at those points. Support is deemed as a low value for a stock which may have been a previous low on the stock chart or maybe a previous strong resistance where buyers may have found value again in a stocks price. Resistance is the exact opposite in which it may be a previous high value on a stock chart or a previous support at which point sellers have appeared as they take profits from a stock.

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